Boston Scientific Corporation (NYSE:BSX) Q2 2024 Earnings Conference Call July 24, 2024 8:00 AM ET
Company Participants
Jon Monson - SVP, IR
Michael F. Mahoney - Chairman and CEO
Daniel J. Brennan - EVP and CFO
Kenneth Stein - SVP, Global Chief Medical Officer
Conference Call Participants
Robert Marcus - JPMorgan
Joanne Wuensch - Citigroup Inc.
Lawrence Biegelsen - Wells Fargo Securities
Frederick Wise - Stifel, Nicolaus & Company
Vijay Kumar - Evercore ISI
David Roman - Goldman Sachs
Patrick Wood - Morgan Stanley
Travis Steed - Barclays Bank
Joshua Jennings - TD Cowen
Danielle Antalffy - Leerink Partners
Matthew O'Brien - Piper Sandler
Matthew Taylor - Jefferies
Operator
Good morning, and welcome to the Boston Scientific Second Quarter 2024 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Jon Monson, Senior Vice President, Investor Relations. Please go ahead.
Jon Monson
Thank you, Drew, and welcome everyone and thanks for joining us today. With me on today's call are Mike Mahoney, Chairman and Chief Executive Officer, and Dan Brennan, Executive Vice President and Chief Financial Officer. We issued a press release earlier this morning announcing our Q2 results, which included reconciliations of the non-GAAP measures used in this release. We have posted a link to that release as well as reconciliations of the non-GAAP measures used in today's call to the Investor Relations section of our website under the heading Financials and Filings. The duration of this morning's call will be approximately one hour. Mike and Dan will provide comments on Q2 performance as well as the outlook for our business, including Q3 and full year 2024 guidance, and then we'll take your questions. During today's Q&A session, Mike and Dan will be joined by our Chief Medical Officer, Dr. Ken Stein.
Before we begin, I'd like to remind everyone that on the call, operational revenue excludes the impact of foreign currency fluctuations, and organic revenue further excludes acquisitions and divestitures for which there are less than a full period of comparable net sales. Relevant acquisitions and divestitures excluded for organic growth are the majority stake investment in Acotec Scientific Holdings Limited and the acquisitions of Apollo Endosurgery and Relievant Medsystems, which closed in February, April and November 2023 respectively, as well as our acquisition of the Endoluminal Vacuum Therapy portfolio from B. Braun, which closed in March 2024. Divestitures include the Endoscopy, Pathology business, which closed in April 2023. Guidance excludes the previously-announced agreement to acquire Axonics and Silk Road Medical both of which are expected to close in the second half of 2024, subject to customary closing conditions. For more information, please refer to the Q2 Financial and Operational Highlights deck, which may be found on the Investor Relations section of our website.
On this call, all references to sales and revenue, unless otherwise specified, are organic. This call contains forward-looking statements within the meaning of Federal Securities Law, which may be identified by words like anticipate, expect, may, believe, estimate, and other similar words. They include, among other things, statements about our growth and market share, new and anticipated product approvals and launches, acquisitions, clinical trials, cost savings and growth opportunities, our cash flow and expected use of cash, our financial performance, including sales, margins and earnings, as well as our tax rates, R&D spend and other expenses. If our underlying assumptions turn out to be incorrect or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. Factors that may cause such differences include those described in the Risk Factors section of our most recent 10-K and subsequent 10-Qs filed with the SEC. These statements speak only as of today's date and we disclaim any intention or obligation to update them except as required by law. At this point, I'll turn over to Mike. Mike?
Michael F. Mahoney
Thanks, Jon, and thank you, everyone, for joining us today. Our second quarter results exceeded our expectations, led by the strength of our differentiated global cardiovascular portfolio, particularly the execution in AF Solutions and the winning spirit of our global team. In second quarter, total company operational sales grew 16, organic sales grew 15, exceeding the high end of our guidance range of 10 to 12. Our top tier growth continues to be fueled by innovation, clinical evidence generation, and our strategy of category leadership.
Consistent with prior quarters, most of our businesses and regions grew well above market. Second quarter adjusted EPS of $0.62 grew 15% versus 2023, exceeding the high end of our guidance range of $0.57 to $0.59. Second quarter adjusted operating margin was 27.2% and as a result of our first half margin performance and revenue upside versus previous expectations, we now expect to expand adjusted operating margin 50 to 70 basis points for the full year.
Turning to the third quarter and full year 2024 outlook, we're guiding to organic growth of 13% to 15% for third quarter and raising our full year guidance from 10% to 12% to 13% to 14%, reflecting momentum across our broad portfolio, particularly in our EP business unit. Our third quarter adjusted EPS guidance is $0.57 to $0.59 and we expect our full year adjusted EPS to be $2.38 to $2.42, representing growth of 16% to 18%. Dan will provide more details on our financials and I'll provide some additional color on the quarter and the outlook for the second half of 2024.
Regionally and on an operational basis, the U.S. grew 17% in second quarter with exceptional growth in EP, fueled by the continuous success of the FARAPULSE launch, as well as Watchman, coronary imaging, and strengthen our med-surg businesses. Europe grew 16% on an operational basis versus second quarter 2023. This impressive performance was driven by double-digit growth in seven of our eight business units, led by robust growth in EP and strength across our growth and emerging markets.
Second quarter was also a record quarter in the region for our structural heart business, following positive data presented on ACURATE Neo2 at the recent Euro PCR Conference. We expect this momentum to continue, supported by the launch of the largest size ACURATE prime valve in late 2024.
Asia-Pac grew 13% operationally versus a difficult comp in second quarter 2023, with excellent performance in China, growing high teens, and Japan growing double digits. We also recently received approval in China for FARAPULSE and AGENT Drug-Coated Balloon, and continue to expect approval for FARAPULSE in Japan in the second half of this year.
We expect the contribution from these launches will ramp over 2025. Within the quarter, pricing actions in key geographies went into effect with a China VBP on coronary imaging, and Japan reimbursement cuts in June. We do expect Asia-Pac to grow low double digits in the second half of the year, including the full impact of these pricing actions.
Some additional commentary on the business units. Our urology business grew 9% organically in the quarter with double-digit growth in stone management and prosthetic urology, supported by our direct-to-patient efforts, driving patient awareness, and early contribution from the limited market release of the Tenacio Pump.
International growth of 14% was driven by laser therapies and Rezum. We look forward to closing this previously announced acquisition of Axonics, which we are continuing to expect in the second half of this year. Endoscopy sales grew 8% both operationally and organically in second quarter. Second quarter results were driven by above market growth in our Biliary franchise, led by high teens growth in AXIOS, and the high teens growth in our Endoluminal Surgery franchise. We continue to expect Endo sales to go faster than the market throughout 2024, enabled by our innovative portfolio.
Neuromodulation sales grew 16% operationally and 4% organically in the quarter. Our Brain franchise grew low single digits with some impact from competitive product launches. We expect this business to strengthen in the second half of the year, driven by our portfolio of differentiated technologies.
In second quarter, our pain franchise grew strong double digits operationally and mid single digits on an organic basis. Our spinal cord stem business saw improved U.S. trialing cadence in the quarter and we expect that our U.S. SCS franchise will improve in the second half of the year. The relieving business continues to perform extremely well with more than 30,000 patients treated with the Intracept System to date.
Peripheral Intervention sales grew 12% operationally and 9% organically versus second quarter. High single-digit growth in Arterial was driven by continued momentum in our drug-eluting portfolio, with double-digit growth in the quarter. Mid single-digit growth in Venous was driven by momentum of EKOS supported by the real P/E data set and continued double-digit growth in Varithena. Our Interventional Oncology franchise grew double digits in second quarter, driven by our broad offering across embolization and cancer therapies. Looking forward, we continue to expect to close the previously announced acquisition of Silk Road Medical in the second half of this year.
Cardiology. Cardiology delivered another excellent quarter with organic sales growing 22% versus second quarter 2023. Within cardiology, interventional cardiology therapy sales grew 9%, growth in coronary therapies was driven by continued strength in our global imaging franchise and APAC calcium franchise. Within the quarter, we initiated a limited launch of AGENT DCB in the U.S., which has received positive initial physician feedback. Our structural heart valves franchise grew strong double digits in the second quarter, led by ACURATE Neo2, which continues to see growth from both new and existing accounts in Europe and Latin America.
At the end of the quarter, we also completed follow-up of the full 1,500 patient cohort and the U.S. ACURATE IDE trial. We now expect to present this data in the first half of 2025 likely at the Annual ACC Meeting. Watchman had another excellent quarter growing 20% organically with strong contribution from the ongoing launch of Watchman FLX Pro in the U.S. and Japan. The U.S. grew 20% led by further penetration into the existing indicated patient population enabled by our innovation, clinical evidence, and patient awareness efforts.
Cardiac Rhythm Management sales grew 3% organically in the quarter. In second quarter, our Diagnostics franchise grew double digits. This above-market growth was driven by our broad cardiac diagnostics portfolio. In Core CRM, our high and low voltage business grew low single digits with strong international growth partially offset by slightly below market growth in the U.S. At the recent HRS Meeting, data was presented from the MODULAR ATP Trial of the MODULAR CRM System, which is comprised of the EMPOWER Leadless Pacemaker and EMBLEM SICD, which met all pre-specified six-month endpoints and a high rate of ATP success with no patient requests for deactivation of pacing due to pain or discomfort.
Turning to EP. EP sales grew an impressive 125% organically versus second quarter 2023, driven by the rapid and sustained adoption of the transformative FARAPULSE PFA System. Second quarter sales were driven by outstanding commercial execution, robust supply, and positive real-world outcomes, as well as increased AF ablation volumes, supported by the efficiency of the FARAPULSE workflow. Our Baylis Access Solutions business also continues to see strong double-digit growth in the U.S. with utilization in approximately 80% of PFA procedures and approximately 85% of Watchman procedures. Internationally, we saw continued FARAPULSE account openings and robust utilization in Europe and launched APAC markets. Importantly, evidence of more than 20,000 patients treated with FARAPULSE has been published or presented at medical conferences, demonstrating the safety, efficacy, and reproducibility of the system. And within the quarter, we completed an enrollment in the NAVIGATE-PF study of the FARAVIEW software module and FARAWAVE Nav-enabled catheter, both of which are expected to launch in the U.S. during the second half of the year.
At the recent HRS meeting, outcomes from a sub-analysis of the ADVENT trial were presented. This is the very first randomized data for a PFA system demonstrating superior efficacy versus thermal modalities, with significantly more patients having achieved an arterial arrhythmic burden of less than 0.1% with FARAPULSE compared to RF and Cryo. We plan to continue a steady cadence of clinical evidence generation to maintain our PFA leadership, including Rematch-AF, a planned trial designed to study the FARAPOINT and FARAWAVE catheter in patients who need a redo ablation, which we expect to begin enrolling early in 2025.
In closing, I'm very grateful to our global team for the commitment and winning spirit, enabling us to deliver life-changing technologies to millions of patients. We're in the most exciting chapters as a company with a track record of executing or exceeding our financial goals while delivering meaningful innovation. With that, I'll hand it over to Dan.
Daniel J. Brennan
Thanks, Mike. Second quarter 2024 consolidated revenue of $4.120 billion represents 14.5% reported growth versus second quarter 2023 and includes a 160 basis point headwind from foreign exchange, which was slightly unfavorable, versus our expectations. Excluding this $57 million foreign exchange headwind, operational revenue growth was 16.1% in the quarter. The sales impact from closed acquisitions was 140 basis points, resulting in 14.7% organic revenue growth, exceeding our second quarter guidance range of 10% to 12%. Q2 2024 adjusted earnings per share of $0.62, grew 15.4% versus 2023, exceeding the high end of our guidance range of $0.57 to $0.59, primarily driven by our strong sales performance.
Adjusted gross margin for the second quarter was 70.4%, contracting 160 basis points versus the prior year period, driven by higher than expected inventory charges related to the POLARx cryoablation system, given the strong commercial adoption of FARAPULSE in the U.S., as well as increased levels of capital placements in the quarter. We continue to expect second half adjusted gross margin to be higher than the first half, driven by the mixed benefit from key product launches and full recognition of our annual standard cost improvements. We expect full-year adjusted gross margin to be slightly below our 2023 rate.
Second quarter adjusted operating margin was 27.2%, which expanded 40 basis points versus the prior year period. Given our strong first half operating margin and our expectations for the second half, we are raising our full-year 2024 adjusted operating margin expansion goal to 50 to 70 basis points from 30 to 50 basis points compared to 2023. We believe this strikes a nice balance of delivering incremental margin from our sales upside and continuing to invest appropriately to drive strong top line performance. On a GAAP basis, second quarter operating margin was 12.6%, which included intangible asset impairment charges related to the acquisitions of Cryterion Medical and Devoro Medical. The Cryterion impairment charges were related to the high conversion rates of cryoablation to FARAPULSE for ablation procedures in the U.S. The Devoro impairment charges were related to the decision to discontinue work advancing the Wolf thrombectomy platform.
Moving to below the line, second quarter adjusted interest and other expenses totaled $68 million, which was favorable to our expectations. On an adjusted basis, our tax rate for the second quarter was 13.1%, which includes favorable discrete tax items. Our operational tax rate for the quarter was 13.6%. Fully diluted weighted average shares outstanding ended at 1.484 billion shares in the second quarter. Free cash flow for the second quarter was $660 million with $814 million from operating activities, less $155 million in net capital expenditures, which includes payments of $200 million related to acquisitions, restructuring, litigation, and other special items. In 2024, we continue to expect full year free cash flow to exceed $2 billion, which includes approximately $700 million of expected payments related to special items.
As of June 30, 2024 we had cash on hand of $2.9 billion and our gross debt leverage ratio was 2.4 times. Our top capital allocation priority remains strategic tuck-in M&A, followed by annual share repurchases to offset dilution from employee stock grants. In alignment with our acquisition strategy, in Q2 we announced our agreement to acquire Silk Road Medical and closed the acquisition of SoundCath [ph], a pre-revenue, privately held medical technology company developing an intracardiac echocardiography product complementing our existing electrophysiology portfolio. Our legal reserve was $251 million as of June 30th, a decrease of $32 million versus Q1 2024. $54 million of this reserve is already funded through our qualified settlement funds.
I will now walk through guidance for Q3 and full year 2024. We expect full year 2024 reported revenue growth to be in a range of 13.5% to 14.5% versus 2023. Excluding an approximate 100 basis point headwind from foreign exchange based on current rates, we expect full year 2024 operational revenue growth to be 14.5% to 15.5%. Excluding a 150 basis point contribution from closed acquisitions, we expect full year 2024 organic revenue growth to be in a range of 13% to 14% versus 2023. We expect third quarter 2024 reported revenue growth to be in a range of 13% to 15% versus third quarter 2023. Excluding an approximate 100 basis point headwind from foreign exchange based on current rates, we expect third quarter 2024 operational revenue growth to be 14% to 16%. Excluding a 100 basis point contribution from closed acquisitions, we expect third quarter 2024 organic revenue growth to be in a range of 13% to 15% versus 2023. We now expect full year 2024 adjusted below the line expenses to be approximately $300 million.
Given discrete items recognized in the first half of 2024, we now expect a full year 2024 operational tax rate of approximately 13.5% and an adjusted tax rate of approximately 12.5%, which contemplates current legislation, including enacted laws and issued guidance under OECD pillar two rules. We expect full year adjusted earnings per share to be in a range of $2.38 to $2.42, representing growth of 16% to 18% versus 2023, including an approximate $0.04 headwind from foreign exchange, which is unchanged from our previous expectations. We expect third quarter adjusted earnings per share to be in a range of $0.57 to $0.59. For more information, please check our investor relations website for Q2 2024 financial and operational highlights, which outlines more details on Q2 results and 2024 guidance. And with that, I'll turn it back to Jon, who will moderate the Q&A.
Jon Monson
Thanks, Dan. Drew, let's open it up for questions for the next 40 minutes or so. In order for us to take as many questions as possible, please limit yourself to one question. Drew, please go ahead.
Question-and-Answer Session
Operator
[Operator Instructions]. The first question comes from Robbie Marcus with JPMorgan. Please go ahead.
Robert Marcus
Oh, thank you and congratulations on another fantastic quarter here.
Michael F. Mahoney
Thanks, Robbie.
Daniel J. Brennan
Thanks, Robbie.
Robert Marcus
With my one question, I want to ask about guidance and the sustainability. This is a, it was a big quarter. You had a big first quarter. PFA is clearly outperforming. Watchman had a great quarter. A lot of the rest of the business continues to fire on all cylinders. So I'm seeing about 14% organic for the back half of the year, which is a really healthy rate. And I guess really the question is, how do you feel about continuing through 2024 and really into 2025? Is this a pull forward of the revenues expected in the long range plan, or do you think there's better demand, better market adoption, better volumes underlying pricing that could keep maybe not 14%, but something elevated for the foreseeable future? Thanks.
Michael F. Mahoney
Sure, Rob. I'll take a shot at. We're not going to give 2025 guidance here but at our Investor Day, we said our goal was to be the highest performing med tech company in terms of sales and EPS growth, which we believe we did in 2023. Our aim is to do that in 2024 and our aim is to do that for many years to come. And I think one is the primary drivers of you've seen the decade-long portfolio shift into faster-growth markets for the company, where weighted average market growth rate is probably closer to 7% to 8% versus what it used to be kind of flat.
So one, we enjoy because of our portfolio choices, faster growing markets. Secondly, we have strong growth across the world. You're seeing Europe double digits, Asia Pac double digits where FARAPULSE is not yet launched. And obviously, the U.S. doing quite well as well. And then I think you just have to look at the durability of other businesses. We'll likely talk about FARAPULSE and WATCHMAN a lot on the call, but you see continued strong growth, 8% to 9%-ish through the first half within our MedSurg businesses. So that kind of gets diminished because of the strength of some other areas, but that's pretty good.
And then the cardiovascular portfolio is just getting stronger and stronger. With our EP franchise, Baylis, what we're doing with coronary with Drug-Coated Balloon, you saw the results with ACURATE in Europe, and also potentially some benefits with concomitant reimbursement in the future. And who knows, maybe these procedures may move over time to an ASC center and EP, which also, we think would benefit Boston Scientific given our solution.
So we had a tough comp in 2023 with a 12%. Our guidance for the full year is now 13% to 14%. We won't give 2025 guidance, but our goal is to be really distinguish ourselves from the peer group in terms of revenue growth and EPS, and we have the portfolio and the team to do it.
Robert Marcus
Appreciate the thoughts. Thanks.
Operator
The next question comes from Joanne Wuensch with Citibank. Please go ahead.
Joanne Wuensch
Thank you so much for taking the question and I echo a very nice quarter. Can we unpack just a little bit and you may not like this question, but I get it a lot, what's next, and how do we think about -- to your point, we're going to talk about FARAPULSE and Watchman a lot, but people are now sort of looking forward at how does this continue to roll out to deliver this kind of growth? And thank you.
Michael F. Mahoney
Yes. I think it's -- thanks, Joanne. I think it's similar to some of the themes I just highlighted. We have -- we're in a higher weighted average market growth rate markets to start. We see consistent procedure volume around the world. We are in a pricing environment where we used to be a price giver, pretty significantly. Now it's getting closer to negative 1 to 0. We also expect on the margin front, we took our margin goals up for the year. We expect gross margin to improve over time.
Right now, we're getting more margin benefit from SG&A primarily, which is good leverage. We would expect to get more gross margin upside over the LRP period and we just have a very strong product cadence in very fast-growing markets. The two of the best markets in all of MEDTECH, obviously, are our EP and WATCHMAN and we have strong leadership position in PFA and that market is only growing. And we are going to launch that in Asia.
And we have a lot of clinical work going on with WATCHMAN, as you know, to significantly increase the TAM of that market where it'll rival the TAVI market, three to five years from now. So the clinical evidence that we have in fast-growing market is different in the portfolio, and we continue to make and place strong M&A bets with Axonics and Silk and our venture portfolio, which we'll continue to leverage. So the playbook hasn't changed, but it's the execution of the team of continually putting this in better markets and out-executing the competition.
Joanne Wuensch
Thank you very much.
Operator
The next question comes from Larry Biegelsen with Wells Fargo. Please go ahead.
Lawrence Biegelsen
Hi, good morning. Thanks for taking the questions and congrats on a really nice quarter here. Mike, maybe just to drill down on EP and FARAPULSE. I guess it's a similar question, but just the sustainability here of the growth and the share. By our math, it looks like you've captured about 15% of the U.S. EP market in the second quarter, excluding Baylis. Help us understand how durable your EP share and growth is. Can EP continue to be a growth driver for Boston Scientific for years to come? And what's driving your confidence you can compete effectively with FARA [ph] and FARAPULSE [ph] when they launch? Thank you.
Michael F. Mahoney
So I'll start and then Dr. Stein can maybe talk about how we're really leading the field in our clinical evidence and some of the physician comment. We're competing with those companies today in Europe. With J&J, with all the companies that have PFA platforms. And you've heard us talk on many calls now on the differentiation of FARAPULSE in terms of its safety profile, the clinical data and the -- really, the usage of physicians who never considered using Boston Scientific EP prior, many of them have completely converted to using FARAPULSE for their A-fibrillation procedures.
But we're still relatively early in our launch in the U.S. It's less than six months of launching in the U.S. and we have yet to launch in China, and we've yet to launch in Japan, and we have a lot more to do in Europe and we have additional indications coming and additional portfolio coming. So we think the short story is the FARAPULSE platform, combined with Baylis, combined with our clinical, will be a differentiated growth driver for Boston for many years to come. Now will it grow as it continues to scale up over 100% a quarter, unlikely, but we expect this to be maybe the biggest business of Boston Scientific in the years to come here.
Kenneth Stein
And Larry, maybe just to sort of add on Mike said first just -- I mean, AF is the most common sustained arrhythmia in the world. Ablation therapy for AF today is still dramatically underpenetrated, right? I mean ablation, high single-digit penetration for persistent afib, low double-digit penetration for paroxysmal afib and the safety advantages, the efficacy advantages, the efficiency advantages and just the overall simplicity of the FARAPULSE system, I think, are just going to continue to drive the size of that market and penetration into that market.
In terms of the competition, right, again, we do expect to see competitors bring out their first-generation products late this year, early next year, they're already approved in Europe. And frankly, as Mike said earlier, right, we have not seen that materially impact the rapid sustained adoption of FARAPULSE in Europe. And FARAPULSE is a transformative technology with really important differentiated advantages against these competitors. As Mike said, right, treated over 70,000 patients to date, published clinical trial data on over 20,000 patients to date, which really testifies to the safety, to the simplicity, to the efficiency and again, Mike referred to the data we presented at Heart Rhythm Society. It's the only system right now with any data testifying to actually superiority in an efficacy measure against traditional ablation.
Lawrence Biegelsen
Thank you.
Operator
The next question comes from Rick Wise with Stifel. Please go ahead.
Jon Monson
Hey Rick, can you hear us.
Frederick Wise
Hi, there, can you hear me.
Jon Monson
Yes, we can hear you now.
Frederick Wise
Great, sorry about that. I was hoping also to talk about PFA from another perspective. In my recent doc checks I've heard a great deal of encouraging interest in RHYTHMIA. And obviously, in many cases that are being mapped now with other companies' systems. Just maybe give us some more color on when you launch your mapping integrated catheter in the second half, I assume that's still the target. How do we think about the implications for RHYTHMIA adoption for the percentage of cases that could be mapped on the RHYTHMIA system and the impact on your growth outlook as a result? Thank you.
Kenneth Stein
Yes. Thanks, Rick. I appreciate the question. Again, we still are projecting approval of both our NAV-enabled FARAWAVE catheter and a completely new software suite on RHYTHMIA that we're calling FARAVIEW to help support that. And we certainly do expect that to help drive more adoption of the use of RHYTHMIA and FARAVIEW to accompany FARAWAVE. Now I want to begin though by saying, FARAPULSE will remain an open system. We want to support workflows that don't involve any use of mapping or navigation, support workflows that involve these competitive systems, but also we'll expect with FARAVIEW and FARAWAVE NAV to provide some major advantages in terms of workflow.
I think important for me I think emphasize that existing mapping and navigation systems don't understand PFA at all. They were built around an RF ablation paradigm. And so FARAVIEW is going to be the first software and a mapping system that fundamentally understands what we do with PFA and with FARAPULSE. There are some important features, dynamic visualization of the catheter as it changes shape from basket flower configuration, field tagging specific to PFA energy. I think when you put all of that together it has the potential to minimize the use of fluoroscopy during these procedures, minimize catheter exchanges, and really continue what we've tried to do and I think have accomplished with FARAPULSE to begin, right, which is to create a procedure that is safer, that is at least as effective, and that is far more simple and efficient compared to what people have been doing with legacy systems.
Michael F. Mahoney
And on the financial side, as you know, you've seen some of the competitive reports. Mapping is a sizable chunk of the overall EP procedure. And when FARAPULSE is being used, you're seeing increased procedure volume based on the efficiency. So some competitors are benefiting from that productivity gain of FARAPULSE. So in addition to strong utilization rates and opening new centers, more broadly impacted in 2025, we do expect a number of physicians to adopt this Fairview platform that Ken said which is additional revenue that you're not seeing today in the FARAPULSE EP procedure.
Frederick Wise
That’s great. Thank you so much.
Operator
The next question comes from Vijay Kumar with Evercore ISI. Please go ahead.
Vijay Kumar
Hi guys, thanks for taking my questions and my congratulations on the experience here. I had one question on U.S. PFA, the 220% growth. Can you parse what was capital contribution versus catheter contribution in the U.S. number. And I think you mentioned a TPT for -- in the U.S., in the outpatient setting, any update on has Boston submitted its TPT? thank you.
Michael F. Mahoney
Yes. So thanks for the question. Unfortunately, we're not going to break out for you the capital and disposable. Disposable is obviously more sizable than the capital, but that's probably the color we'll provide on that. And on the overall pricing, as you do know the pricing is a bit of a premium. But based on the clinical benefits and efficacy and efficiency that physicians and customers are enjoying that seemed to be the proper price point. And on TPT, Ken, do you have any comments on that?
Kenneth Stein
Yes, Vijay. So we have submitted for TPT. Again, I think important to recognize there are some very strict criteria for eligibility for TPT. And I think just to reiterate what Mike said, which is, right now, we are not seeing pricing as a barrier to the rapid and sustained adoption of FARAPULSE.
Operator
Next question comes from David Roman with Goldman Sachs. Please go ahead.
David Roman
Thank you and good morning. I want to keep going a little bit on the EP side. But also, could you talk a little bit more about both the technology and commercial strategy and as you think about the technology side, right now, the bulk of your business right now sits in the ablation side. You talked a little bit about the importance of mapping and access. But how should we think about the portfolio evolving and how that unlocks new opportunities for you, whether that's in the non-AF side of the ablation market, be it with FARAPOINT or some of the other products? And then on the commercial side, where are the opportunities for pull-through here, so for example, are you training your mappers on generator replacements and ICDs and how should we think about the overall benefit to the portfolio?
Michael F. Mahoney
Again, I guess Ken and I will try to tag team this. Thank you for the question. It's maybe the best market in med tech. It's about a $10 billion market. The chunk that we're doing well in now is the $6 billion afib market that we continue to strengthen, and we'll get approval, as you know in Asia impact in 2025. There are a number of other areas that we're trying to move into the mapping segment based on the previous commentary is one. We do have an organic ICE program, which we hopefully will -- which is a 510(k) product, hopefully, we'll be competitive with the new ICE platform during this LRP period, which is another large slice of it. And Ken can probably detail out a bit more the clinical studies that we're doing to widen the indication for FARAPULSE beyond what is used today.
Kenneth Stein
Yes. Thanks, Mike. So David, let me start with the clinical strategy and then maybe say a little more about where we're going from a technology standpoint as well because I think it's important, right. That all the other stuff we're doing doesn't just get lost in the excitement around FARAPULSE as exciting as FARAPULSE is. From clinical trial standpoint, to begin with our ADVANTAGE clinical trial, which is aimed to get labeling for FARAPULSE persistent Afib has completed enrollment. We expect to present those results late this year, early next year. We are well underway in a trial called AVANT GUARD , which is aimed to prove that FARAPULSE used as first-line therapy for patients with persistent atrial fibrillation. We've announced the intent to run a trial called REMATCH, which will look at FARAPULSE for redo ablations.
From a technology standpoint, we've already talked about the FARAWAVE NAV catheter. In addition to that, we have a point catheter, FARAPOINT that's through its clinical trial. And then down the road, I think more sophisticated catheters for both mapping and ablation catheter called FARAFLEX. And I think as you can imagine, we are interested in the use of this for many arrhythmias beyond atrial fibrillation, atrial tachycardia, and ventricular tachycardia, that pretty much you name it. But I don't want some of the other technology innovations to get lost.
And so right, the EP performance was not only a FARAPULSE story, fantastic performance from our Access Solutions portfolio. And in terms of pull-through, right, see very good synergy between FARAPULSE and the Access solution products, likewise, in really good synergy between the WATCHMAN and the Access Solution products. Again, I think in terms of the pull-through question, with the most obvious opportunity, as Mike mentioned, is the opportunity now to have reimbursement in the U.S. for concomitant FARAPULSE ablation and WATCHMAN procedures, which we expect will be a growth driver and hope to see that finalized before the end of this year by CMS.
Again, Dan mentioned our acquisition of SoundCath, so an ICE product to support EP procedures and potentially also WATCHMAN procedures, probably just a very long-winded way of saying we love FARAPULSE, but it is far from the only story.
Operator
The next question comes from Patrick Wood with Morgan Stanley. Please go ahead.
Patrick Wood
Fabulous, thank you. And on that note, I might flip the script if that's alright with everybody. And maybe switch to something a little different. Obviously, you guys announced Silk and appreciate that hasn't closed yet, but I'd love if you could unpack what was so exciting for you guys in TCAR and that asset overall and the ability to flip WALLSTENT into the package and how meaningful that is relative to just the capacity to plug it into Boston overall and drive sales? Anything around that would be great.
Michael F. Mahoney
Sure. Silk is really a terrific asset we've looked at for a long time. Hopefully, we aim to close that in the second half this year. As a stand-alone business, they were really kind of leading the rejuvenation of that field through their clinical evidence and their performance over many years in the U.S. And it came to a point where we felt it was mature enough in terms of its sales ramp and for us to acquire it at the right price. So I guess, first of all, it always starts with clinical indications. We're really pleased with the data and the long-term durability of this procedure. So as a stand-alone company, they're growing certainly accretive to Boston Scientific faster, but clearly not there on the margin front. So now in Boston Scientific sense we feel like we can grow the company faster in the U.S. given the category leadership portfolio we have and a common call point with a vascular surgeon. We also have the ability to take it outside the U.S. to appropriate countries. And we also aim to improve the margin profile of the business by integrating the company as appropriately within our operations supply chain team like we've done for many other acquisitions in the past.
So it's an accretive asset that we think will be stronger and more profitable in the hands of Boston and make us more important for the vascular surgeon, which is an area that as the needs improvement for us, I would say, within that business unit. So now we have the lever -- not the leverage, but the capabilities to present to vascular surgeons our broader PI portfolio, given the relationships that the Silk Road team has with the vascular surgeon.
Patrick Wood
Brilliant, thanks Mike.
Operator
The next question comes from Travis Steed with Bank of America. Please go ahead.
Travis Steed
Hey, thanks for taking the question. I wanted to ask, given the strong margin guide raise and EPS guide raise here, where you're at kind of on the FARAPULSE getting those to full margins and the scale there. Are you halfway there, kind of more or less and your willingness to kind of continue to let that flow through? And I also wanted to ask about TAVR. It felt like a little bit of a time change and tone change on TAVR, so I just wanted to make sure we didn't miss anything on the TAVR update?
Daniel J. Brennan
Sure. I can start on the gross margin and then Mike can take the TAVR one. So where are we on the journey? As Mike said, we're early in the journey in the United States relative to the FARAPULSE launch. That corresponds pretty well with the gross margin story. So if you think of where we are, the standard margin for FARAPULSE is absolutely accretive relative to the catheter. So that's a great accretive gross margin growth driver. The things that in the initial stages are a little bit dilutive are obviously, you heard me talk about the inventory charges with respect to POLARx. So we don't want to take inventory charges, but when it's -- when you're taking them as a result of the success of FARAPULSE, that's -- it should be temporary and should not be something that continues. So those should get better over time.
The manufacturing brands, so we have built our manufacturing capacity and our operations and supply chain team to be the leaders in this space. So we have significant capacity. So as we're making the product today, it's a little under absorbed relative to that. So that will get better, obviously, as we make more and that's obviously our plan. And then the capital placements are dilutive. Again, it's not a huge number relative to the overall gross margin for the company, but it does at the edges, kind of take that down a bit. So overall, I would say FARAPULSE, every quarter, FARAPULSE will be a better contributor to margin. And I think as you get into 2025 and 2026, it will be a significantly accretive growth driver for gross margin for the company.
Michael F. Mahoney
On TAVI, the European team has done really an outstanding quarter and outstanding quarters back to back with ACURATE Neo2, over 20% growth. Importantly, we expect to launch in fourth quarter or maybe first quarter 2025 Prime, which is our next-generation ACURATE Neo2 that has all risk indications and the full-size matrix, which has been the challenge for us to date with an optimized delivery in the valve frame. On the -- just to reiterate on the U.S. timing, we did complete enrollment of the 1,500 patient cohort. And we do expect to present the data in the first half of 2025 likely at the ACC meeting. I think it's important to note that this is the largest randomized trial that's been done in TAVI really based on the timing of the last patient follow-up and the size of the trial and the multiple risk and mixed control groups that we have in it. It's an extensive trial and we believe that the first half 2025 and likely at ACC is the appropriate timing.
Daniel J. Brennan
And then just as a quick follow-up to the gross margin question, Travis. None of that is a surprise relative to gross margin. So we've been saying all along the gross margin is not likely to help the margin improvement story in 2024. But lo and behold, we're able to increase the overall operating margin from 30 to 50 to 50 to 70. So I think all is well on the margin expansion front. Really proud of that 50 to 70 relative to the guidance for this year. And as you look to 2025 and beyond, I think gross margin, I think all lines of the P&L can contribute to the margin expansion journey and gross margin will be one of those.
Travis Steed
Great, very helpful. Thanks a lot.
Operator
The next question comes from Josh Jennings with TD Cowen. Please go ahead.
Joshua Jennings
Good morning. Thanks a lot for taking the questions and congrats on the stellar results. Wanted to just follow up on Travis' two questions. I guess, first on TAVR, could we see top line data before the ACC presentation next year and could Boston file before that presentation? And then just the other follow-up is just on the profitability you guys you're seeing in a lot of profitability flow through on the outperformance on the top line. I wanted to just get a sense of taking some of that profitability and reinvesting that, where could we see -- where some of those dollars going and just some high-level commentary on that reinvestment driving -- supporting this sustainability of top-tier revenue growth in the med tech space? Thanks for taking the questions.
Kenneth Stein
Yes, Josh, maybe I'll take the TAVR question first and then let Dan and Mike take the others. Just really what Mike said, last patient follow-up in the trial was just in this quarter, it's a very large, very complex trial. And just honestly, based on the timing of getting the data cleaned and getting the readouts from all of the various core labs [ph] that are engaged in getting us the analysis for the trial, we are going to miss the abstract deadlines for all of the major fall meetings. So those deadlines literally come up within a couple of weeks. And again, these data are so important and pivotal, right, we want to present this at a major meeting. And so right, the first major cardiology meeting, where we'll be able to meet an abstract deadline is going to be the ACC. Would not expect you to see any data released ahead of that.
Daniel J. Brennan
And the second part of your question relative to the balance between reinvesting the sales upside and dropping some through. I think you're seeing the evidence of that here in our guidance raise for the 50 to 70. So I think we've struck a really good balance on that. So we've had sales upside during the year and the realization that we closed the first half a little bit ahead of expectations. So we're giving some of that back. So we're taking the 30 to 50 to the 50 to 70. So that's great. At the same time, we are reinvesting in the business, primarily in the commercial facing functions. We're leveraging the back office and the administrative areas, which makes sense. We don't need to grow those when you're growing the revenue at the rate that we're at. So we've got significant leverage opportunities there. And then as Mike said, this isn't just reinvesting in FARAPULSE. This is reinvesting across the whole portfolio, the broad portfolio that we have. So we picked the right spots to reinvest to be able to continue to deliver that top line performance for the long term. And I think we're striking a nice balance there.
Operator
The next question comes from Daniel Antalffy with UBS. Please go ahead.
Danielle Antalffy
Hey, good morning everyone. Thanks so much for taking the question. And I'll be a broken record here. Congrats on the really awesome quarter. Mike, I wanted to go in a different direction here away from PFA for a second and talk about how we should think, just on this theme of sustainability of growth into 2025, appreciating we'll give guidance here. But if we think about AGENT DCB launching back half of this year and Modular in the back half or, I guess, is that launching this year as well. So how do we think about those contributing maybe elevating CRM growth above the market in next year as well as the Interventional Cardiology portfolio? Thanks so much.
Michael F. Mahoney
Thank you for pointing that out because I was getting hammered by tax from our agent team and our CRM team for not mentioning those in the prior question. So I think if you were to continue to add on that discussion, which is how do we maintain and sustain high performance, that's highly differentiated from the peer group for the -- for many years to come. It's all the things we talked about before with PFA and WATCHMAN indication expansion. And as you said, with the AGENT, kudos to that team, they're really transforming that portfolio. Drug-eluting stents next year will probably be 2% of overall Boston Scientific. And you're seeing tremendous growth in our imaging business with our IVUS imaging platform. And now we're the first one to have approval for AGENTS, and that TPT decision will be made soon and apply and hopefully, in January. And that is a market that we plan to drive where we have a multiyear advantage, where we have superiority data for what is at least 10% of the market with restenosis and appropriate price points. That's going to accelerate the growth of that division and significantly improve the margin profile over time.
Why we continue to invest in clinical science and our structural heart portfolio and also, we have a very vast VC portfolio. And oftentimes, those VC investments come with dilution, which our team is able to manage consistently while investing for the future, while improving margins at the same time. So I think that's a big part of it. As you do know, the CRM business is a bit of a lag for us. International business did quite well. U.S. lagged a little bit and the Modular ATP, proud of the team for that. That was a long study, a very difficult project. But you saw the results of that S-ICD with the modular platform and we're excited to launch that in 2025. So there are two other areas that I didn't mention before that you pointed out.
And also, what's not being mentioned here today is just the tremendous growth in our Endo and Uro businesses. Our Uro business is near double digits for the first half. Our Endo business is near double digit for the first half. Those are all accretive margin companies for us. We're very excited about the Axonics acquisition, which will have operational benefit in 2025 and organic in 2026 primarily. But it just makes those divisions even stronger. So there's many things to be excited about for the future of the company to continue on with a goal of differentiated performance.
Danielle Antalffy
Thank you.
Operator
The next question comes from Matthew O'Brien with Piper Scientific. Please go ahead.
Matthew O’Brien
Great, thanks so much. From Piper Sandler. Just maybe on just sticking with kind of where Danielle is going outside of PFA. Just on the WATCHMAN business, 20% growth is a little bit of a tick up versus Q1. Your competitor said they grew 45% in the quarter. So are you losing a little bit of share to those guys or is the market starting to accelerate for some reason, I don't know if it's in front of this concomitant reimbursement, just maybe talk a little bit about that? And then maybe for Dr. Stein specifically, if you get this concomitant reimbursement, can you just talk about the workflow for the clinician in terms of doing a PFA case plus a WATCHMAN case at the same time. I mean how much more challenging is that you have to bring in an ICE sometimes and other times not bringing ICE and to do the WATCHMAN part of the case, just maybe talk a little bit about that opportunity going forward? Thank you.
Michael F. Mahoney
Yes, I'll just touch on the growth, 20% is excellent. We're in the midst of launching our WATCHMAN FLX Pro and maybe as importantly, this new steerable sheet, which is early in its launch. And so I think to clinical data and the extremely high market share of WATCHMAN speaks for itself and the ongoing R&D platforms that we're driving for WATCHMAN and clinical science. So we are extremely comfortable that we're nearly 90% of share in the U.S. and there may be some extremely price-sensitive accounts that will occasionally lose business to. But it's very, very small margin. Very, very small numbers. And if you look at the size of the WATCHMAN business and our share and our technology lead, we're very comfortable with the position we're in.
Kenneth Stein
Yes. And then in terms of just workflow and concomitant, this is one of the areas where I think in between, right, the safety and efficiency advantages of WATCHMAN FLX and FLX Pro combined with the efficiency and safety advantages of FARAPULSE could create a real advantage for us as a unified ecosystem. The beauty of doing these two procedures together, right, is they both involve transseptal access into the left atrium. They both involve the catheter manipulation inside the left atrium. So there's a huge benefit to patients to be able to have it all done at one sitting as opposed to having to have one procedure and then go through many of the same risks of the first procedure go and have it done as a second procedure. And just to reiterate, when you think of doing it as a concomitant procedure what you want our technologies that enable you to do it safely and we do it reproducibly and enable you to do it efficiently. So you're spending as little time as possible, right, mucking about inside someone's left atrium. And FARAPULSE and WATCHMAN FLX Pro together are unmatched in giving you those advantages.
Operator
And I understand there is time for one last question.
Michael F. Mahoney
Yes, please.
Operator
Okay. That last question will come from Matt Taylor with Jefferies. Please go ahead.
Matthew Taylor
Hi, good morning guys, thank you for taking the questions. Congrats on a great quarter. I did want to ask a follow-up question on FARAPULSE just to help with thinking about the modeling and the opportunity there. Could you give us any kind of update or parameters on how many centers you're in, how many boxes you've placed, and maybe talk about whether the early experience has changed your views on how the market could evolve like you laid out at the Analyst Day several months ago?
Michael F. Mahoney
Yes, I think the only piece of that we'll provide color on is the last part of it. We don't want to break out catheter usage, capital usage, how many sites. I would say the utilization rates of sites once they use FARAPULSE is very quick and sustainable. So we're not seeing hospitals turn it on and turn it off and go in and out of it, like you see in many med tech products. So the sustainability and usage of FARAPULSE is very high once customers start using it. And obviously, we have a chance to sell more consoles to larger centers in the existing accounts besides opening new accounts. And the second part was what -- having a senior moment.
[Multiple Speakers]
Great, thanks. I ended it with a dud, sorry Matt.
Matthew O’Brien
That’s okay, alright.
Jon Monson
Well, thanks, everyone, for joining us today. As always, we appreciate your interest in Boston Scientific. If we were unable to get to your question or have any follow-ups, please don't hesitate to reach out to the Investor Relations team. And before you disconnect, Drew will give you all the pertinent details for the replay. Thanks so much.
Operator
Thank you. Please note a recording will be available in one hour by dialing either 1-877-344-7529 or 1-412-317-0088, using replay code 2312308 until July 31, 2024 at 11:59 P.M. Eastern Time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.